Big food trader still bullish on coffee in particular
Basic supply and demand are bolstering prices for most agricultural commodities, but one of the top food traders is not universally bullish.
Tag Archives: sugar
India's sweet tooth likely to force sugar imports
Demand for cookies and candy in India has reached the point where the country — the world’s largest sugar consumer — can no longer meet its long-term supply needs.
Sugar prices on the rise, thanks to Brazil
The price of sugar has jumped to multi-month highs thanks to worries over the size of Brazil’s sugar crop. This marks a reversal of fortune for sugar which has been among the worst performing commodities this year.
Commodities are only getting started
Stocks and bonds have had an okay year and currencies have been mixed — but commodities as an asset class have delivered spectacular performance.
Unilever confirms: inflation is alive
Global food and household products maker Unilever has “never seen” more volatile commodity markets and is raising its prices to compensate. Expect
Sugar is now at record highs
What have we been saying about sugar? Now that the Fed is pushing the dollar lower, the price of the sweet stuff is hitting back-to-back records — and analysts expect more ahead.
Ethanol catches fire after long lull
The big players in the oil industry are grabbing ethanol opportunities on the prospect that a weaker dollar and global economic recovery will send crude prices back on the rally trail.
Cosan analyst day: sugar still sweet
Cosan recently hosted its first New York investor day to give Wall Street a closer look at its top management from all its business segments: sugar, ethanol production, fuel distribution.
Key takeaways: Sugar prices should remain strong through 2011 and beyond, while M&A will remain a focus — although no acquisitions are expected in the long term, the company’s entrenched focus on sugar will probably expand into other food categories where it can apply its existing brand.
This Brazilian ethanol producer has drastically transformed its business — and its balance sheet — over the last two years, and is now a global investor’s primary choice when looking for exposure to either Brazil or the ethanol/sugar ecosystem.
Bank of America Merrill Lynch is re-rating its target multiple for CZZ (quote) following the company’s joint venture with Shell (RYDAF, quote).
Basically, BofAML thinks that as CZZ streamlines its operation now, it will provide a base for future organic growth and M&A. The fuel distribution venture with RYDAF will unlock synergies, while corporate governance is improving.
This is generally bullish for the company over the long term. CZZ may end up a global powerhouse brand — and as sugar markets heat up around the world, that could mean a great deal in the long term.
Commodities were looking rich anyway
Is the CRB index looking a little toppy at these levels? You bet it is, and now that the dollar is bouncing back, the commodity markets look like they have plenty of room to retrench from here.
Take sugar, for example. Over the last two months, the benchmark futures contract on raw sugar has soared 57% as near-term production in key markets like Brazil fails to keep up with global demand.
This has naturally been bullish for sugar stocks like Cosan (CZZ, quote) and Corn Products International (CPO, quote).
It is true that the long-term fundamentals for sugar and other “soft” commodities in the agricultural space are extremely bullish. Consumption in emerging markets in particular is already soaring; India, for example, has become the diabetes capital of the world, while sugar shortages in countries like Cambodia and Vietnam are already causing political tension.
But in the short term, it is doubtful that this kind of gain is sustainable as Indian supply comes online for the first time in years.
This pattern plays out across the commodity markets: wheat (heavily bought in the wake of the Russian drought), corn (which is becoming a strategic necessity for Beijing) and metals like copper, zinc and aluminum.
In all these cases, the long-term fundamentals look good. But for the time being, prices might have gotten a bit ahead of themselves, especially if the dollar gets stronger.